Enbridge Inc.
TSX : ENB
NYSE : ENB

Enbridge Inc.

November 05, 2008 07:00 ET

Enbridge Reports Another Solid Quarter

Highlights - Third quarter earnings increased 90% to $148 million - Third quarter adjusted operating earnings increased 9% to $86 million - Nine month earnings increased 134% to $1,057 million - Nine month adjusted operating earnings increased 8% to $474 million - Project financing of $1.7 billion secured for Southern Lights Pipeline - Construction began on the Canadian portion of the Alberta Clipper Project, the Line 4 Extension Project and the Spearhead Pipeline Expansion Project - Ultra green fuel cell power recovery unit completed

CALGARY, ALBERTA--(Marketwire - Nov. 5, 2008) - Enbridge Inc. (TSX:ENB) (NYSE:ENB)

"Enbridge's solid third quarter performance, with significant growth in reported earnings and adjusted operating earnings, demonstrates clearly that our investor value proposition positions us as a 'safe haven' in turbulent times," said Patrick D. Daniel, President and Chief Executive Officer. "We remain confident that adjusted operating earnings per share for 2008 will be within the previously communicated guidance range of $1.85 to $1.95, despite the effect of Hurricane Ike and recent declines in energy commodity prices. We also expect to achieve a 10% plus average annual growth rate in adjusted operating earnings per share from 2007 through 2012. With the recently secured $1.7 billion Southern Lights project financing, $3.4 billion in available liquidity, and our strong credit rating, Enbridge has adequate liquidity and financial flexibility to maintain our growth plans even with difficult financial markets.

"Our 'wave one' construction activity on projects including Southern Access, Alberta Clipper, Line 4 Extension and Southern Lights, is well underway and generally on time and on budget," continued Mr. Daniel. "Looking ahead to 'wave two', we continue to work towards gaining commercial support for our phased approach to deliver Canadian crude oil to U.S. Gulf Coast markets. Our strategy, which is to use existing pipelines and rights-of-way where possible, would minimize our capital costs and the financial commitments required by shippers while providing access to the market on the schedule that best meets their needs.

"I am also pleased with the progress on another of our environmental sustainability initiatives, the completion of construction of our first hybrid turbo expander/fuel cell ultra green electric power recovery unit. This is a promising technology for which Enbridge has a leading role and exclusive North American distribution rights," concluded Mr. Daniel. "It builds on our leadership role with respect to windpower and CO2 sequestration development."

On November 4, 2008, the Enbridge Board of Directors declared quarterly dividends of $0.33 per common share and $0.34375 per Series A Preferred Share. Both dividends are payable on December 1, 2008 to shareholders of record on November 14, 2008.

Forward Looking Information

This news release contains forward looking information. Significant related assumptions and risk factors are described under the Forward Looking Information section of this news release.



CONSOLIDATED EARNINGS
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
(millions of Canadian dollars, ---------------------------------------
except per share amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Liquids Pipelines 74.1 62.4 226.5 197.1
Gas Pipelines 12.6 11.9 39.7 51.0
Sponsored Investments 27.4 21.4 80.5 72.6
Gas Distribution and Services 35.8 (25.0) 173.9 107.1
International 6.7 22.6 600.9 68.6
Corporate (8.2) (15.2) (64.1) (44.8)
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Earnings Applicable to Common
Shareholders 148.4 78.1 1,057.4 451.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per Common Share 0.41 0.22 2.94 1.27
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----------------------------------------------------------------------------


Earnings applicable to common shareholders were $148.4 million for the three months ended September 30, 2008, or $0.41 per share, compared with $78.1 million, or $0.22 per share for the three months ended September 30, 2007. The $70.3 million increase reflected $61.4 million in unrealized fair value gains on derivative financial instruments in Aux Sable and Energy Services, allowance for equity funds used during construction (AEDC) in Liquids Pipelines and a higher contribution from Enbridge Gas Distribution (EGD), partially offset by decreased earnings from International as the Company sold its interest in Compania Logistica de Hidrocarburos CLH, S.A. (CLH) in the second quarter of 2008.

Earnings applicable to common shareholders were $1,057.4 million for the nine months ended September 30, 2008, or $2.94 per share, compared with $451.6 million, or $1.27 per share, for the same period in 2007. The increase in earnings resulted from similar factors as for the three month results; however, earnings for the nine month period ended September 30, 2008 also reflected a $556.1 million after-tax gain on the sale of CLH as well as the recognition of a $32.2 million income tax charge as a result of an unfavourable court decision related to previously owned U.S. pipeline assets.

Non-GAAP Measures

This news release contains references to adjusted operating earnings, which represent earnings applicable to common shareholders adjusted for non-operating factors. The non-operating factors are reconciled and discussed in the Financial Results sections for the affected business segments. Management believes that the presentation of adjusted operating earnings provides useful information to investors and shareholders as it provides increased predictive value. Management uses adjusted operating earnings to set targets and assess performance of the Company. Also, the Company's dividend payout target is based on adjusted operating earnings. Adjusted operating earnings is not a measure that has a standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP) and is not considered a GAAP measure; therefore, this measure may not be comparable with a similar measure presented by other issuers.



ADJUSTED OPERATING EARNINGS
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
(millions of Canadian dollars, ---------------------------------------
except per share amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Liquids Pipelines 74.1 62.4 226.5 197.1
Gas Pipelines 10.3 11.9 36.9 45.7
Sponsored Investments 22.8 21.9 72.9 63.2
Gas Distribution and Services (19.9) (24.6) 129.9 108.1
International 6.7 22.6 44.8 68.6
Corporate (8.2) (15.2) (36.8) (44.8)
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Adjusted Operating Earnings 85.8 79.0 474.2 437.9
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----------------------------------------------------------------------------
Adjusted Operating Earnings per
Common Share 0.24 0.22 1.32 1.23
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Adjusted operating earnings were $85.8 million, or $0.24 per share, for the three months ended September 30, 2008, compared with $79.0 million, or $0.22 per share, for the three months ended September 30, 2007 and $474.2 million, or $1.32 per share, for the nine months ended September 30, 2008, compared with $437.9 million, or $1.23 per share, for the nine months ended September 30, 2007.

The following factors increased adjusted operating earnings in both the three and nine month periods.

- AEDC on Southern Lights Pipeline and, within Enbridge System, on both Southern Access Mainline Expansion and Alberta Clipper Project.

- A higher contribution from EGD in 2008 primarily due to customer growth and lower borrowing costs in combination with the new incentive regulation regime.

- Increased Aux Sable adjusted operating earnings due to strong fractionation margins which enabled the Company to recognize earnings from the upside sharing mechanism.

- The completion, in May, of the Waupisoo Pipeline within the Athabasca System.

These increases were partially offset by decreased earnings from International as a result of the sale of CLH in the second quarter of 2008 and, in the third quarter, by losses in the Energy Services businesses due primarily to the impact of falling crude oil prices on current positions.

While under construction, certain regulated pipelines are entitled to recognize AEDC in earnings. These amounts will contribute to earnings throughout the Company's significant growth period and will be collected in tolls once the pipelines are in service.

The Company has foreign currency denominated earnings, primarily from U.S. based operations and investments. The Company uses long-term derivative contracts to economically hedge a significant portion of the cash distributions from these long-term investments. However, this does not eliminate the Canadian GAAP volatility caused by exchange rate differences. During the nine months ended September 30, 2008, settled foreign currency denominated cash distributions and associated hedge transactions resulting in $46.7 million (2007 - $12.5 million) in incremental after-tax cash flows, which were not included in reported earnings.



LIQUIDS PIPELINES
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Three months ended Nine months ended
September 30, September 30,
---------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Enbridge System 45.6 46.4 147.0 140.6
Athabasca System 17.5 10.8 46.3 37.4
Spearhead Pipeline 3.9 1.6 9.3 6.0
Olympic Pipeline 1.7 2.5 6.5 7.7
Southern Lights Pipeline 7.5 1.3 16.4 2.6
Feeder Pipelines and Other (2.1) (0.2) 1.0 2.8
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Earnings 74.1 62.4 226.5 197.1
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----------------------------------------------------------------------------


- Enbridge System earnings included AEDC on both Southern Access Mainline Expansion (Stage 2) and Alberta Clipper Project as well as increased tolls resulting from a higher rate base due to Southern Access. In the quarter, these increases were more than offset by labour costs as well as higher pipeline integrity costs.

- The increase in Athabasca System earnings reflected tolls collected on Waupisoo Pipeline since June 2008 and the positive impact of terminal infrastructure additions.

- Spearhead Pipeline earnings increased as a result of higher uncommitted throughputs and related higher tolls.

- Olympic Pipeline earnings decreased in the nine month period due to planned maintenance in the first quarter of 2008. Third quarter results reflected lower average tolls effective July 1, 2008 to compensate for over collection in 2007. Olympic's cost of service tolling methodology requires annual toll adjustments for over or under collection in prior years.

- Southern Lights Pipeline earnings reflected AEDC recognized while the project is under construction.

- The decrease in earnings from Feeder Pipelines and Other resulted from business development expenditures, primarily on "second wave" organic growth projects.



GAS PIPELINES
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
---------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Alliance Pipeline US 6.1 6.6 18.0 21.4
Vector Pipeline 3.1 3.8 10.1 10.7
Enbridge Offshore Pipelines(Offshore) 1.1 1.5 8.8 13.6
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Adjusted Operating Earnings 10.3 11.9 36.9 45.7
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Alliance Pipeline US shipper claim
settlement - - 2.8 -
Offshore property insurance
recovery from 2005 hurricanes 2.3 - 2.3 5.3
Offshore repair costs from 2005
hurricanes - - (2.3) -
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Earnings 12.6 11.9 39.7 51.0
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----------------------------------------------------------------------------


- Alliance Pipeline US adjusted operating earnings decreased as a result of a depreciating rate base and the weaker U.S. dollar.

- Offshore adjusted operating earnings for both the three and nine months ended September 30, 2008 decreased as a result of continuing natural production declines as well as approximately $4.0 million in lost revenue and initial clean up costs related to Hurricanes Gustav and Ike. These decreases were partially offset by stand-by fees on the Neptune oil and gas pipelines which came into service in the fourth quarter of 2007, as well as contributions from Atlantis platform volumes. Also, earnings for the nine months ended September 30, 2008 included approximately $2.0 million (2007 - $6.0 million) from business interruption insurance proceeds related to lost revenue in 2005 and 2006 as a result of the 2005 hurricanes.

Gas Pipelines earnings were impacted by the following non-operating adjusting items:

- In the first quarter of 2008, Alliance Pipeline US received $2.8 million in proceeds from the settlement of a claim against a former shipper which repudiated its capacity commitment.

- Earnings from Offshore included $2.3 million for additional repair costs in the second quarter and $2.3 million for the related insurance settlement in the third quarter. Earnings for the nine months ended September 30, 2007 also included insurance proceeds of $5.3 million related to the replacement of damaged infrastructure as a result of the 2005 hurricanes.



SPONSORED INVESTMENTS
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
---------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Enbridge Energy Partners (EEP) 13.2 12.7 41.9 34.7
Enbridge Income Fund (EIF) 9.6 9.2 31.0 28.5
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Adjusted Operating Earnings 22.8 21.9 72.9 63.2
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Dilution gain on EEP Class A unit
issuance - - 4.5 11.8
EEP unrealized derivative fair
value gains/(losses) 4.6 (0.5) 1.8 (2.1)
EIF - Alliance Canada shipper
claim settlement - - 1.3 -
EIF - revalue future income taxes
due to tax rate changes - - - (0.3)
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Earnings 27.4 21.4 80.5 72.6
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----------------------------------------------------------------------------


- EEP adjusted operating earnings increased as a result of higher incentive income and increased earnings at EEP due to higher gas and crude oil delivery volumes, tariff surcharges for recent expansions and improved unit margins in natural gas due to expanded facilities. During the quarter, these increases were partially offset by reduced revenues associated with the impacts of Hurricanes Gustav and Ike as well as non-cash charges recorded to reduce the cost basis of natural gas inventory to fair market value as a result of declines in the price of natural gas.

- Enbridge Income Fund adjusted operating earnings for the nine months ended September 30, 2008 reflected a 7.5% increase in the monthly distributions received from the Fund, effective May 2008, as well as a one-time special distribution of $0.024 per unit. On November 3, 2008, the Fund announced that it will increase regular monthly distributions by 11.6% to $0.096 per unit, effective with the distribution to be paid to unitholders of record at the end of January 2009.

Sponsored Investments earnings were impacted by the following non-operating adjusting items:

- Year-to-date earnings include dilution gains because Enbridge did not fully participate in EEP Class A unit offerings. Enbridge's ownership interest in EEP decreased from 15.1% to 14.6% as a result of the offering in the first quarter of 2008.

- Earnings from EEP included a change in the unrealized fair value on derivative financial instruments in each period.

- Earnings from EIF for the nine months ended September 30, 2008 included proceeds of $1.3 million from the settlement of a claim against a former shipper on Alliance Canada which repudiated its capacity commitment.



GAS DISTRIBUTION AND SERVICES
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
---------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Enbridge Gas Distribution (EGD) (19.5) (29.5) 76.1 63.1
Noverco (5.1) (5.8) 10.9 10.2
Enbridge Gas New Brunswick 3.8 3.1 10.5 9.0
Other Gas Distribution (0.6) (0.9) 5.6 5.2
Energy Services (5.0) 3.2 8.5 8.2
Aux Sable 8.4 5.7 21.8 8.6
Other (1.9) (0.4) (3.5) 3.8
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Adjusted Operating Earnings (19.9) (24.6) 129.9 108.1
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Colder than normal weather
affecting EGD - - 9.9 11.2
Energy Services unrealized
derivative fair value gains/(losses) 55.2 0.6 20.0 (3.9)
Energy Services - SemGroup and
Lehman bankruptcies (5.7) - (5.7) -
Aux Sable unrealized derivative
fair value gains/(losses) 6.2 (1.0) 19.8 (12.1)
Revalue future income taxes due to
tax rate changes - - - 3.8
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Earnings 35.8 (25.0) 173.9 107.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------


- EGD's third quarter results improved primarily due to customer growth and higher storage and transportation capacity revenue as well as the timing differences related to fixed charges on customers' bills. As the third quarter is seasonally warm, costs are typically not covered during this quarter resulting in losses. As initially reflected in results for the first quarter of 2008, EGD's fixed charge per customer increased with a corresponding decrease in the per unit volumetric charge. These changes modify the quarterly earnings profile, but do not materially affect full year earnings as revenues are shifted from the colder winter quarters to the warmer summer quarters. Adjusted operating earnings increased for the nine month period ended September 30, 2008 due to customer growth, lower borrowing costs and as a result of incentives from exceeding targets for promotion of energy efficient use of gas to customers, in combination with the new incentive regulation regime.

- Energy Services adjusted operating earnings for the three months ended September 30, 2008 decreased as a result of non-cash charges recorded to reduce the cost basis of inventory to fair market value as a result of declines in commodity prices as well as reduced realized optimization gains compared with the prior year.

- Aux Sable adjusted operating earnings increased due to strong fractionation margins which enabled the Company to recognize earnings from the upside sharing mechanism.

- Losses in Other primarily reflected lower earnings from CustomerWorks which resulted from the April 2007 transition of customer care services related to EGD to a third party service provider pursuant to an Ontario Energy Board (OEB) recommendation.

Gas Distribution and Services earnings were impacted by the following non-operating adjusting items:

- Energy Services earnings for the third quarter of 2008 reflected unrealized fair value gains on derivative instruments, resulting from outstanding storage transactions in Tidal Energy that were positively impacted by declining crude oil prices. These non-cash gains arose due to the revaluation of financial derivatives used to "lock-in" the profitability of forward transportation and storage transactions at Tidal Energy.

- Energy Services earnings for the three months ended September 30, 2008 also included a $5.7 million write-off as a result of bankruptcies by SemGroup and Lehman Brothers. The full amount of all such receivables has been provided for and some potential for partial recovery exists.

- Aux Sable year-to-date earnings reflected unrealized fair value gains on derivative financial instruments used to mitigate the uncertainty of the Company's share of the contingent upside sharing mechanism which allows Aux Sable to share in natural gas processing margins in excess of certain thresholds. Similar to Energy Services, these non-cash gains arose due to the revaluation of financial derivatives used to "lock in" the profitability of forward contracted prices.



INTERNATIONAL
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
---------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
OCENSA/CITCol 8.2 8.1 24.5 24.5
CLH - 15.3 24.7 46.5
Other (1.5) (0.8) (4.4) (2.4)
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Adjusted Operating Earnings 6.7 22.6 44.8 68.6
----------------------------------------------------------------------------
Gain on sale of investment in CLH - - 556.1 -
----------------------------------------------------------------------------
Earnings 6.7 22.6 600.9 68.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------


- International's adjusted operating earnings decreased for both the three and nine months ended September 30, 2008 as a result of the sale of CLH on June 17, 2008.



CORPORATE
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
---------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Adjusted Corporate Costs (8.2) (15.2) (36.8) (44.8)
----------------------------------------------------------------------------
Gain on sale of corporate aircraft - - 4.9 -
U.S. pipeline tax decision - - (32.2) -
----------------------------------------------------------------------------
Costs (8.2) (15.2) (64.1) (44.8)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


- Corporate costs before adjusting items were $8.2 million for the three months ended September 30, 2008, compared with $15.2 million for the three months ended September 30, 2007 and $36.8 million for the nine months ended September 30, 2008, compared with $44.8 million for the nine months ended September 30, 2007. The decrease in adjusted costs for both periods was primarily due to decreased interest expense resulting from lower interest rates on short-term debt and lower levels of corporate debt, largely related to repayments from the proceeds of CLH as well as higher tax recoveries.

Corporate costs were impacted by the following non-operating adjusting items:

- An unfavourable court decision related to the tax basis of previously owned U.S. pipeline assets which resulted in the recognition of a $32.2 million income tax expense; and

- A $4.9 million gain on the sale of a corporate aircraft.

CONFERENCE CALL

Enbridge will hold a conference call on Wednesday, November 5, 2008 at 9:00 a.m. Eastern time (7:00 a.m. Mountain time) to discuss the third quarter 2008 results. Analysts, members of the media and other interested parties can access the call at 617-597-5347 or toll-free at 1-866-362-4831 using the access code of 31183717. The call will be audio webcast live at www.enbridge.com/investor. A webcast replay will be available approximately two hours after the conclusion of the event and a transcript will be posted to the website within approximately 24 hours. The webcast replay will be available at toll-free 1-888-286-8010 or 617-801-6888. The access code for the replay is 98245310.

The conference call will begin with a presentation by the Company's Chief Executive Officer and Chief Financial Officer followed by a question and answer period for investment analysts. A question and answer period for members of the media will immediately follow.

The unaudited interim consolidated financial statements and Management's Discussion and Analysis, which contain additional notes and disclosures, are available on the Enbridge website.

Enbridge Inc., a Canadian company, is a leader in energy transportation and distribution in North America and internationally. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world's longest crude oil and liquids transportation system. The Company also has international operations and a growing involvement in the natural gas transmission and midstream businesses. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. Enbridge employs approximately 5,700 people, primarily in Canada, the United States and South America. Enbridge's common shares trade on the Toronto Stock Exchange in Canada and on the New York Stock Exchange in the U.S. under the symbol ENB. Information about Enbridge is available on the Company's website at www.enbridge.com.

FORWARD-LOOKING INFORMATION

Forward-looking information, or forward-looking statements, have been included in this news release to provide Enbridge Inc. shareholders and potential investors with information about the Company and its subsidiaries, including management's assessment of Enbridge's and its subsidiaries' future plans and operations. This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Although Enbridge believes that these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Material assumptions include assumptions about the expected supply and demand for crude oil, natural gas and natural gas liquids; prices of crude oil, natural gas and natural gas liquids; expected exchange rates; inflation; interest rates; the availability and price of labour and pipeline construction materials; operational reliability; anticipated in-service dates and weather.

Enbridge's forward-looking statements are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, weather, economic conditions, exchange rates, interest rates and commodity prices, including but not limited to those risks and uncertainties discussed in this news release and in the Company's other filings with Canadian and United States securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Enbridge's future course of action depends on management's assessment of all information available at the relevant time. Except to the extent required by law, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or persons acting on the Company's behalf, are expressly qualified in their entirety by these cautionary statements.




ENBRIDGE INC.
HIGHLIGHTS
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
(unaudited; millions of Canadian ----------------------------------------
dollars, except per share amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Earnings Applicable to Common
Shareholders
Liquids Pipelines 74.1 62.4 226.5 197.1
Gas Pipelines 12.6 11.9 39.7 51.0
Sponsored Investments 27.4 21.4 80.5 72.6
Gas Distribution and Services 35.8 (25.0) 173.9 107.1
International 6.7 22.6 600.9 68.6
Corporate (8.2) (15.2) (64.1) (44.8)
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148.4 78.1 1,057.4 451.6
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Cash Flow Data
Cash provided by operating activities
before changes in operating
assets and liabilities 226.6 212.9 889.7 935.3
Cash provided by/(used in) operating
activities (131.8) (79.4) 950.5 1,101.8
Additions to property, plant and
equipment 819.8 672.6 2,084.6 1,574.2
Total Common Share Dividends 122.5 113.1 366.4 338.9
Per Common Share Information
Earnings per Common Share 0.41 0.22 2.94 1.27
Diluted Earnings per Common Share 0.41 0.22 2.92 1.26
Dividends per Common Share 0.3300 0.3075 0.9900 0.9225
Shares Outstanding
Weighted Average Common Shares
Outstanding (millions) 359.3 354.7
Diluted Weighted Average Common Shares
Outstanding (millions) 362.1 357.7
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Operating Data
Liquids Pipelines - Average Deliveries
(thousands of barrels per day)
Enbridge System(1) 1,970 1,977 2,002 2,001
Athabasca System(2) 233 175 190 165
Spearhead Pipeline 110 91 108 97
Olympic Pipeline 292 285 292 287
Gas Pipelines - Average Throughput
Volume (millions of cubic feet per
day)
Alliance Pipeline US 1,546 1,535 1,618 1,606
Vector Pipeline 1,207 974 1,298 984
Enbridge Offshore Pipelines 1,743 2,201 1,604 2,118
Gas Distribution and Services(3)
Volumes (billion cubic feet per period) 45 48 307 316
Number of active customers
(thousands) 1,922 1,880 1,922 1,880
Degree day deficiency(4)
Actual 72 45 2,423 2,439
Forecast based on normal weather 87 92 2,332 2,380
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1. Enbridge System includes Canadian mainline deliveries in Western Canada
and to the Lakehead System at the U.S. border as well as Line 8 and Line
9 in Eastern Canada.
2. Volumes are for the Athabasca mainline only and do not include laterals
on the Athabasca System.
3. Gas Distribution and Services volumes and the number of active customers
are derived from the aggregate system supply and direct purchase gas
supply arrangements.
4. Degree day deficiency is a measure of coldness which is indicative of
volumetric requirements of natural gas utilized for heating purposes.
It is calculated by accumulating for each day in the period the total
number of degrees each day by which the daily mean temperature falls
below 18 degrees Celsius. The figures given are those accumulated in the
Greater Toronto Area.


ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF EARNINGS
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
(unaudited; millions of Canadian ----------------------------------------
dollars, except per share amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Revenues
Commodity sales 3,766.4 2,124.8 10,316.7 6,972.4
Transportation 492.9 456.4 1,582.7 1,541.4
Energy services 109.2 52.8 308.4 207.1
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4,368.5 2,634.0 12,207.8 8,720.9
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Expenses
Commodity costs 3,590.7 2,004.6 9,869.1 6,583.4
Operating and administrative 327.4 290.0 927.9 844.9
Depreciation and amortization 171.3 151.0 483.3 450.0
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4,089.4 2,445.6 11,280.3 7,878.3
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279.1 188.4 927.5 842.6
Income from Equity Investments 32.0 31.4 122.2 111.8
Other Investment Income 41.4 24.9 138.4 133.5
Interest Expense (133.3) (135.6) (398.6) (409.4)
Gain on Sale of Investment in CLH - - 694.6 -
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219.2 109.1 1,484.1 678.5
Non-Controlling Interests (13.9) (9.7) (40.5) (34.7)
----------------------------------------------------------------------------
205.3 99.4 1,443.6 643.8
Income Taxes (55.2) (19.6) (381.1) (187.1)
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Earnings 150.1 79.8 1,062.5 456.7
Preferred Share Dividends (1.7) (1.7) (5.1) (5.1)
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Earnings Applicable to Common
Shareholders 148.4 78.1 1,057.4 451.6
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Earnings per Common Share 0.41 0.22 2.94 1.27
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Diluted Earnings per Common Share 0.41 0.22 2.92 1.26
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ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
(unaudited; millions of Canadian ----------------------------------------
dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Earnings 150.1 79.8 1,062.5 456.7
Other Comprehensive Income/(Loss)
Change in unrealized gains/(losses)
on cash flow hedges, net of tax (63.2) 17.6 (59.7) 59.1
Reclassification to earnings of
realized cash flow hedges, net of tax 16.8 (8.1) 13.7 8.8
Other comprehensive gain/(loss) from
equity investees 43.1 0.5 8.3 (4.5)
Non-controlling interest in other
comprehensive income (20.2) (1.8) (2.4) 1.2
Change in foreign currency translation
adjustment 93.9 (164.8) 164.8 (443.5)
Change in unrealized gains/(losses) on
net investment hedges, net of tax (35.7) 66.7 (71.9) 166.8
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Other Comprehensive Income/(Loss) 34.7 (89.9) 52.8 (212.1)
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Comprehensive Income 184.8 (10.1) 1,115.3 244.6
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ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
----------------------------------------------------------------------------
Nine months ended
September 30,
------------------------
(unaudited; millions of Canadian dollars) 2008 2007
----------------------------------------------------------------------------

Preferred Shares 125.0 125.0
----------------------------------------------------------------------------

Common Shares
Balance at beginning of period 3,026.5 2,416.1
Common shares issued - 566.4
Dividend reinvestment and share purchase plan 106.1 13.9
Shares issued on exercise of stock options 30.0 21.4
----------------------------------------------------------------------------
Balance at End of Period 3,162.6 3,017.8
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Contributed Surplus
Balance at beginning of period 25.7 18.3
Stock-based compensation 12.5 8.1
Options exercised (2.1) (1.2)
----------------------------------------------------------------------------
Balance at End of Period 36.1 25.2
----------------------------------------------------------------------------

Retained Earnings
Balance at beginning of period 2,537.3 2,322.7
Earnings applicable to common shareholders 1,057.4 451.6
Common share dividends (366.4) (338.9)
Dividends paid to reciprocal shareholder 11.0 10.3
Cumulative impact of change in accounting policy - (47.0)
----------------------------------------------------------------------------
Balance at End of Period 3,239.3 2,398.7
----------------------------------------------------------------------------

Accumulated Other Comprehensive Loss
Balance at beginning of period (285.0) (135.8)
Other comprehensive income/(loss) 52.8 (212.1)
Cumulative impact of change in accounting policy - 48.2
----------------------------------------------------------------------------
Balance at End of Period (232.2) (299.7)
----------------------------------------------------------------------------

Reciprocal Shareholding
Balance at beginning of period (154.3) (135.7)
Participation in common shares issued - (18.6)
----------------------------------------------------------------------------
Balance at End of Period (154.3) (154.3)
----------------------------------------------------------------------------
Total Shareholders' Equity 6,176.5 5,112.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Dividends Paid per Common Share 0.9900 0.9225
----------------------------------------------------------------------------
----------------------------------------------------------------------------


ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
(unaudited; millions of Canadian ----------------------------------------
dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Operating Activities
Earnings 150.1 79.8 1,062.5 456.7
Depreciation and amortization 171.3 151.0 483.3 450.0
Unrealized (gains)/losses on
derivative instruments (97.9) 10.5 (76.5) 24.0
Equity earnings in excess of cash
distributions (10.6) (14.2) (51.4) (42.1)
Gain on reduction of ownership
interest - - (12.3) (33.9)
Gain on sale of investment in CLH - - (694.6) -
Future income taxes (42.0) (36.8) 138.0 34.5
Non-controlling interests 13.9 9.7 40.5 34.7
Other (1.0) 12.9 0.2 11.4
Changes in operating assets and
liabilities (315.6) (292.3) 60.8 166.5
----------------------------------------------------------------------------
(131.8) (79.4) 950.5 1,101.8
----------------------------------------------------------------------------
Investing Activities
Long-term investments (0.7) (4.3) (7.5) (19.7)
Sale of investment in CLH - - 1,369.0 -
Settlement of CLH hedges - - (47.0) -
Additions to property, plant and
equipment (819.8) (672.6) (2,084.6) (1,574.2)
Change in construction payable (3.7) 57.2 8.8 60.9
----------------------------------------------------------------------------
(824.2) (619.7) (761.3) (1,533.0)
----------------------------------------------------------------------------
Financing Activities
Net change in short-term borrowings
and short-term debt 612.1 811.7 (104.1) (298.7)
Net change in non-recourse short-term
debt 2.2 11.7 7.1 18.9
Long-term debt issues 739.4 - 739.4 1,156.6
Long-term debt repayments (352.0) (100.0) (452.0) (634.5)
Non-recourse long-term debt issues 3.0 - 4.2 14.4
Non-recourse long-term debt repayments (1.1) (2.9) (32.4) (31.6)
Distributions to non-controlling
interests 2.7 0.8 (10.4) (11.9)
Common shares issued 1.0 7.0 25.3 593.2
Preferred share dividends (1.7) (1.7) (5.1) (5.1)
Common share dividends (90.7) (113.1) (261.2) (338.9)
----------------------------------------------------------------------------
914.9 613.5 (89.2) 462.4
----------------------------------------------------------------------------
Increase in Cash and Cash Equivalents (41.1) (85.6) 100.0 31.2
Cash and Cash Equivalents at Beginning
of Period 307.8 256.5 166.7 139.7
----------------------------------------------------------------------------
Cash and Cash Equivalents at End of
Period 266.7 170.9 266.7 170.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------


ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
----------------------------------------------------------------------------
September 30, December 31,
(unaudited; millions of Canadian dollars) 2008 2007
----------------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents 266.7 166.7
Accounts receivable and other 2,534.7 2,388.7
Inventory 1,129.9 709.4
----------------------------------------------------------------------------
3,931.3 3,264.8
Property, Plant and Equipment, net 14,440.9 12,597.6
Long-Term Investments 1,610.7 2,076.3
Deferred Amounts and Other Assets 1,139.8 1,182.0
Intangible Assets 211.6 212.0
Goodwill 392.3 388.0
Future Income Taxes 180.4 186.7
----------------------------------------------------------------------------
21,907.0 19,907.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current Liabilities
Short-term borrowings 735.6 545.6
Accounts payable and other 2,757.0 2,213.8
Interest payable 98.0 89.1
Current maturities of long-term debt 535.1 605.2
Current maturities of non-recourse debt 67.2 61.1
----------------------------------------------------------------------------
4,192.9 3,514.8
Long-Term Debt 7,961.4 7,729.0
Non-Recourse Long-Term Debt 1,515.1 1,508.4
Other Long-Term Liabilities 244.9 253.9
Future Income Taxes 1,108.5 975.6
Non-Controlling Interests 707.7 650.5
----------------------------------------------------------------------------
15,730.5 14,632.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Shareholders' Equity
Share capital
Preferred shares 125.0 125.0
Common shares 3,162.6 3,026.5
Contributed surplus 36.1 25.7
Retained earnings 3,239.3 2,537.3
Accumulated other comprehensive loss (232.2) (285.0)
Reciprocal shareholding (154.3) (154.3)
----------------------------------------------------------------------------
6,176.5 5,275.2
----------------------------------------------------------------------------
21,907.0 19,907.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------


ENBRIDGE INC.
SEGMENTED INFORMATION

Three months ended September 30, 2008
----------------------------------------------------------------------------
Gas
Liquids Gas Sponsored Distribution
(millions of Canadian dollars) Pipelines Pipelines Investments and Services
----------------------------------------------------------------------------
Revenues 287.4 85.9 72.2 3,918.3
Commodity costs - - - (3,590.7)
Operating and administrative (128.7) (22.9) (23.2) (141.4)
Depreciation and amortization (47.9) (25.9) (20.3) (75.4)
----------------------------------------------------------------------------
110.8 37.1 28.7 110.8
Income from equity investments 0.1 0.1 41.9 (10.5)
Other investment income 12.9 1.5 2.2 4.9
Interest and preferred share
dividends (25.6) (17.3) (14.8) (49.6)
Non-controlling interests (0.2) - (11.6) (1.8)
Income taxes (23.9) (8.8) (19.0) (18.0)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 74.1 12.6 27.4 35.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Three months ended September 30, 2008
----------------------------------------------------------------------------
(millions of Canadian dollars) International Corporate Consolidated
----------------------------------------------------------------------------
Revenues 2.0 2.7 4,368.5
Commodity costs - - (3,590.7)
Operating and administrative (3.0) (8.2) (327.4)
Depreciation and amortization (0.2) (1.6) (171.3)
----------------------------------------------------------------------------
(1.2) (7.1) 279.1
Income from equity investments - 0.4 32.0
Other investment income 8.4 11.5 41.4
Interest and preferred share
dividends - (27.7) (135.0)
Non-controlling interests - (0.3) (13.9)
Income taxes (0.5) 15.0 (55.2)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 6.7 (8.2) 148.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Three months ended September 30, 2007
----------------------------------------------------------------------------
Gas
Liquids Gas Sponsored Distribution
(millions of Canadian dollars) Pipelines Pipelines Investments and Services
----------------------------------------------------------------------------
Revenues 266.7 76.3 65.0 2,222.0
Commodity costs - - - (2,004.6)
Operating and administrative (110.0) (23.6) (19.4) (128.3)
Depreciation and amortization (39.6) (20.0) (17.8) (71.3)
----------------------------------------------------------------------------
117.1 32.7 27.8 17.8
Income from equity investments (0.3) - 28.0 (11.5)
Other investment income 4.0 1.2 1.0 2.1
Interest and preferred share
dividends (27.3) (15.9) (15.4) (48.7)
Non-controlling interests (0.4) - (7.7) (1.3)
Income taxes (30.7) (6.1) (12.3) 16.6
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 62.4 11.9 21.4 (25.0)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Three months ended September 30, 2007
----------------------------------------------------------------------------
(millions of Canadian dollars) International Corporate Consolidated
----------------------------------------------------------------------------
Revenues 1.9 2.1 2,634.0
Commodity costs - - (2,004.6)
Operating and administrative (3.2) (5.5) (290.0)
Depreciation and amortization (0.2) (2.1) (151.0)
----------------------------------------------------------------------------
(1.5) (5.5) 188.4
Income from equity investments 15.6 (0.4) 31.4
Other investment income 9.0 7.6 24.9
Interest and preferred share
dividends - (30.0) (137.3)
Non-controlling interests - (0.3) (9.7)
Income taxes (0.5) 13.4 (19.6)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 22.6 (15.2) 78.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Nine months ended September 30, 2008
----------------------------------------------------------------------------
Gas
Liquids Gas Sponsored Distribution
(millions of Canadian dollars) Pipelines Pipelines Investments and Services
----------------------------------------------------------------------------
Revenues 831.6 252.0 213.8 10,895.7
Commodity costs - - - (9,869.1)
Operating and administrative (353.4) (74.8) (66.7) (402.0)
Depreciation and amortization (130.6) (70.2) (58.2) (218.7)
----------------------------------------------------------------------------
347.6 107.0 88.9 405.9
Income from equity investments (0.2) 0.1 99.9 (1.4)
Other investment income and
gain on sale of CLH 34.9 7.5 23.5 14.2
Interest and preferred share
dividends (80.5) (48.9) (45.2) (147.7)
Non-controlling interests (0.9) - (33.6) (5.2)
Income taxes (74.4) (26.0) (53.0) (91.9)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 226.5 39.7 80.5 173.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Nine months ended September 30, 2008
----------------------------------------------------------------------------
(millions of Canadian dollars) International Corporate Consolidated
----------------------------------------------------------------------------
Revenues 7.1 7.6 12,207.8
Commodity costs - - (9,869.1)
Operating and administrative (10.8) (20.2) (927.9)
Depreciation and amortization (0.6) (5.0) (483.3)
----------------------------------------------------------------------------
(4.3) (17.6) 927.5
Income from equity investments 25.0 (1.2) 122.2
Other investment income and
gain on sale of CLH 719.0 33.9 833.0
Interest and preferred share
dividends - (81.4) (403.7)
Non-controlling interests - (0.8) (40.5)
Income taxes (138.8) 3.0 (381.1)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 600.9 (64.1) 1,057.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Nine months ended September 30, 2007
----------------------------------------------------------------------------
Gas
Liquids Gas Sponsored Distribution
(millions of Canadian dollars) Pipelines Pipelines Investments and Services
----------------------------------------------------------------------------
Revenues 798.6 241.4 197.8 7,469.8
Commodity costs - - - (6,583.4)
Operating and administrative (312.4) (64.7) (56.7) (384.5)
Depreciation and amortization (117.5) (64.3) (55.9) (207.0)
----------------------------------------------------------------------------
368.7 112.4 85.2 294.9
Income from equity investments (0.7) - 72.2 (3.5)
Other investment income 7.7 18.3 37.8 12.4
Interest and preferred share
dividends (77.1) (50.1) (45.9) (151.9)
Non-controlling interests (1.1) - (28.8) (4.0)
Income taxes (100.4) (29.6) (47.9) (40.8)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 197.1 51.0 72.6 107.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Nine months ended September 30, 2007
----------------------------------------------------------------------------
(millions of Canadian dollars) International Corporate Consolidated
----------------------------------------------------------------------------
Revenues 6.8 6.5 8,720.9
Commodity costs - - (6,583.4)
Operating and administrative (10.4) (16.2) (844.9)
Depreciation and amortization (0.7) (4.6) (450.0)
----------------------------------------------------------------------------
(4.3) (14.3) 842.6
Income from equity investments 44.8 (1.0) 111.8
Other investment income 30.1 27.2 133.5
Interest and preferred share
dividends - (89.5) (414.5)
Non-controlling interests - (0.8) (34.7)
Income taxes (2.0) 33.6 (187.1)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 68.6 (44.8) 451.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------



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